Cable customers could lose Viacom channels

By Jonathan Berr

March 26, 2014 / 4:30 PM
/ MoneyWatch

A consortium of cable operators is warning its more than 5 million customers that channels from Viacom (VIA) could go dark at the end of the month unless the parties can reach an agreement on the fees it pays the media giant for its content.

Viacom, the parent of MTV, Comedy Central and Nickelodeon, is demanding fee increases that are as much as 40 times the rate of inflation (which is now about 1.1 percent), according to the National Cable Television Cooperative (NCTC). Viacom is asking for increases that are significantly higher than what larger companies, which can spread their costs over more customers, have been asked to pay, NCTC chief executive Richard Fickle said in an interview.

"For some customers, they would wind up with a 50 to 75 percent increase in their bills over a couple year period," he said, arguing that the fee increases aren't justified given the declining ratings of Viacom's channels.

Added Matt Polka of the American Cable Association, a group allied with NCTA: "It's unsustainable."

A spokeswoman for Viacom declined to comment on the fee dispute. Talks between the company and the NCTA continue, and both sides seem eager to avoid any disruption in service. These contract negotiations, long a part of the pay TV industry, seem to be coming increasingly adversarial, particularly as costs for programming continue to rise.

In 2012, Viacom channels went dark on DirecTV for 10 days, with some advertisers complaining that it was more difficult to promote products and services to young people without access to the networks, which attract large numbers of these viewers which are not easy for advertisers to target. Time Warner Cable (TWC) lost more than 300,000 customers this summer after a month-long blackout of CBS (CBS) programming.

As for the NCTC, which represents 800 cable systems, the current talks are taking a more confrontational turn than previous talks, when the two parties were able to work out their differences after deadlines were extended. Its members are lining up alternative programming in case the talks with Viacom fall apart.

"We might not reach a deal here, and we have to be prepared for that," the ACA's Polka said.

Meanwhile, these arguments fester elsewhere.

Comcast is threatening to withhold broadcast of 33 Philadelphia Phillies games to rival pay TV operators unless they are prepared to pay what the Philadelphia Inquirer calls a "subscriber surcharge." Comcast, which is also based in Philadelphia, signed a 25-year, $2.5 billion TV rights deal to show the team's games on its regional sports network known as CSN Philly.

One reason why other providers are balking at the added fees may be that many baseball pundits expect the Phillies to have a dismal season.